Red Robin Gourmet Burgers, Inc., (NASDAQ: RRGB), a casual dining
restaurant chain focused on serving an innovative selection of
high-quality gourmet burgers in a family-friendly atmosphere, today
reported financial results for the 12 and 40 weeks ended October 4,
2009.
Financial and Operational Results
Results for the 12 weeks ended October 4, 2009, compared to the
12 weeks ended October 5, 2008, include the following:
- Total revenues decreased 10.4%
to $187.0 million.
- Restaurant revenue decreased
10.4% to $183.9 million.
- Company-owned comparable
restaurant sales decreased 14.9%.
- Restaurant-level operating
profit decreased 20.1% to $30.4 million.
- GAAP diluted earnings per share
were $0.37 vs. $0.40 in the same period a year ago.
- One new franchised Red Robin
restaurant opened during the third quarter 2009.
As of the end of the fiscal third quarter of 2009, there were
304 company-owned and 132 franchised Red Robin® restaurants.
“While Red Robin’s financial results for our fiscal third
quarter reflected continued softness in the casual dining industry
and in the macroeconomic climate as a whole, we are encouraged by
the results we are beginning to see from our targeted initiatives
to drive Guest traffic and retention, as well as the progress our
teams continue to make in managing controllable costs,” said Dennis
B. Mullen, Red Robin Gourmet Burgers, Inc., chairman and chief
executive officer. “Despite the challenging operating environment,
we believe we are focused on the right strategies for the long-term
strength and growth of our business. We will continue to
concentrate on making further progress on improving productivity
and leveraging the success that our recent marketing strategies
have had in building awareness for the quality, variety and value
that Red Robin offers our Guests.”
Fiscal Third Quarter 2009 Results
Comparable restaurant sales decreased 14.9% for company-owned
restaurants in the fiscal third quarter of 2009 compared to the
fiscal third quarter of 2008, driven by a 13.8% decline in guest
counts and 1.1% decrease in the average guest check. Average weekly
comparable sales from the 269 company-owned comparable restaurants
were $51,964 in the fiscal third quarter of 2009, compared to
$62,182 for the 233 company-owned comparable restaurants in the
fiscal third quarter of 2008. Average weekly sales for the 35
non-comparable company-owned restaurants were $49,385 in the fiscal
third quarter of 2009, compared to $56,111 for the 44
non-comparable restaurants in the fiscal third quarter a year ago.
For all company-owned restaurants, average weekly sales were
$51,667 from 3,648 operating weeks in the fiscal third quarter of
2009 compared to $60,974 from 3,433 operating weeks, in the fiscal
third quarter of 2008.
Total Company revenues, which include company-owned restaurant
sales and franchise royalties and fees, decreased 10.4% to $187.0
million in the fiscal third quarter of 2009, versus $208.6 million
last year. Franchise royalties and fees decreased 8.0% to $3.0
million in the fiscal third quarter of 2009 compared to $3.3
million in the same period a year ago.
For the fiscal third quarter of 2009, the Company’s U.S.
franchise restaurant sales of $64.6 million were lower compared to
$71.6 million in the prior year period. Comparable sales in the
fiscal third quarter of 2009 for franchise restaurants in the U.S.
decreased 14.4% and for franchise restaurants in Canada decreased
0.2% from the fiscal third quarter of 2008. Average weekly
comparable sales for the U.S. franchised restaurants were $47,998
from the 101 comparable restaurants in the fiscal third quarter of
2009, compared to $56,749 for the 94 comparable restaurants in the
fiscal third quarter of 2008. Average weekly sales in the fiscal
third quarter of 2009 for the Company’s 18 comparable franchise
restaurants in Canada were C$52,908 versus C$53,008 in the same
period last year. Canadian results are in Canadian dollars.
Restaurant-level operating profit margins at company-owned
restaurants were 16.5% in the fiscal third quarter of 2009 compared
to 18.5% in the fiscal third quarter of 2008. As a percentage of
restaurant revenue, fiscal third quarter 2009 restaurant-level
operating profit margins were negatively impacted by a 1.6%
increase in labor costs and 1.0% higher occupancy costs largely due
to sales deleveraging, partially offset by an approximately 0.3%
decrease in food and beverage costs and 0.3% lower operating
costs.
The Company's restaurant-level operating profit metric does not
represent income from operations or net income calculated in
accordance with generally accepted accounting principles ("GAAP").
Schedule I of this earnings release reconciles restaurant-level
operating profit to income from operations and net income for all
periods presented.
General and administrative expense was $12.1 million in the
fiscal third quarter of 2009 and $15.7 million in the fiscal third
quarter of 2008, which were 6.5% and 7.5% of total revenue,
respectively.
Interest expense was $1.3 million in the fiscal third quarter of
2009, compared to $2.0 million in the fiscal third quarter of
2008.
In the fiscal third quarter of 2009, the Company realized a
reduction in the effective tax rate to 16.3 % compared to 21.6 %
for the fiscal third quarter of 2008.
Net income for the fiscal third quarter of 2009 was $5.7
million, or $0.37 per diluted share, as compared to net income of
$6.2 million, or $0.40 per diluted share, in the fiscal third
quarter of 2008. Included in fiscal third quarter 2008 results were
asset impairment charges of $0.05 per diluted share after tax.
Schedule II of this earnings release reconciles the impact on
the net income and diluted earnings per share as reported on a GAAP
basis in the fiscal third quarter of 2009 and 2008 to adjusted
amounts excluding certain acquisition costs.
Outlook
Since the end of the fiscal third quarter 2009, the Company
opened the last two of the 15 company-owned restaurants planned for
fiscal 2009. One new franchised restaurant scheduled to open in mid
December is expected to be the last of five new franchised
restaurant openings during fiscal 2009.
The Company continues to expect that guest counts will be
negative for the full fiscal year 2009. In addition to the general
macroeconomic pressures, the extent of the traffic declines have
also been impacted by prior-year marketing activities, which create
more difficult comparisons during certain periods. As a result of
the impact of deleveraging on restaurant margins from decreased
restaurant sales and the year-over-year cost pressures from select
food and minimum wage increases, as well as some recent advertising
expenses, the Company expects restaurant-level operating margins
could decline by 150 to 160 basis points for the fiscal year 2009.
For every 10 basis point change in restaurant level operating
profit during fiscal year 2009, diluted earnings per share are
estimated to be impacted by approximately $0.04.
Investor Conference Call and
Webcast
Red Robin will host an investor conference call to discuss its
third quarter 2009 results today at 5:00 p.m. ET. The conference
call number is (888) 417-8516. To access the webcast, please visit
www.redrobin.com and select the “Investors” link from the menu. The
quarterly financial information that the Company intends to discuss
during the conference call is included in this press release and
will be available on the "Investors" link of the Company's website
at www.redrobin.com prior to the conference call.
About Red Robin Gourmet Burgers,
Inc. (NASDAQ: RRGB)
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), a casual
dining restaurant chain founded in 1969 that operates through its
wholly-owned subsidiary, Red Robin International, Inc., serves up
wholesome, fun, feel-good experiences in a family-friendly
environment. Red Robin® restaurants are famous for serving more
than two dozen insanely delicious, high-quality gourmet burgers in
a variety of recipes with Bottomless Steak Fries®, as well as
salads, soups, appetizers, entrees, desserts, and signature Mad
Mixology® Beverages. There are more than 430 Red Robin® restaurants
located across the United States and Canada, including
company-owned locations and those operating under franchise
agreements.
Forward-Looking
Statements:
Certain information and statements contained in this press
release, including those under the heading “Outlook,” are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements include statements regarding our expectations, beliefs,
intentions, plans, objectives, goals, strategies, future events or
performance and underlying assumptions and other statements which
are other than statements of historical facts. These statements may
be identified, without limitation, by the use of forward-looking
terminology such as “believe,” “continue,” “expects,”
“anticipates,” “will” or comparable terms or the negative thereof.
All forward-looking statements included in this press release are
based on information available to the Company on the date hereof.
Such statements speak only as of the date hereof and we undertake
no obligation to update any such statement to reflect events or
circumstances arising after the date hereof. These statements are
based on assumptions believed by us to be reasonable, and involve
known and unknown risks and uncertainties that could cause actual
results to differ materially from those described in the
statements. These risks and uncertainties include, but are not
limited to, the following: the downturn in general economic
conditions including severe volatility in financial markets and
decreasing consumer confidence, resulting in changes in consumer
preferences, or consumer discretionary spending; potential
fluctuation in our quarterly operating results due to economic
conditions, seasonality and other factors; changes in availability
of capital or credit facility borrowings to us and to our
franchisees; the adequacy of cash flows generated by our business
to fund operations and growth opportunities; our ability to achieve
and manage our planned expansion, including both in new markets and
existing markets; changes in the cost and availability of building
materials and restaurant supplies; the concentration of our
restaurants in the Western United States and the associated
disproportionate impact of macroeconomic factors; changes in
the availability and costs of food; changes in labor and energy
costs and changes in the ability of our vendors to meet our supply
requirements; labor shortages, particularly in new markets; the
effectiveness of our initiative to normalize new restaurant
operations; lack of awareness of our brand in new markets; the
effectiveness of our advertising strategy; higher percentage of
operating weeks from non-comparable restaurants; concentration of
less mature restaurants in the comparable restaurant base which
impacts profitability; the ability of our franchisees to open and
manage new restaurants; the effect of increased competition in the
casual dining market and discounting by competitors; health
concerns about our food products and food preparation; our ability
to protect our intellectual property and proprietary information;
the impact of federal, state or local government regulations
relating to our team members or the sale of food or alcoholic
beverages; our franchisees’ adherence to our practices, policies
and procedures; and other risk factors described from time to time
in the Company’s 10-Q and 10-K filings with the SEC.
RESTAURANT UNIT DATA
The following table details restaurant unit data for
company-owned and franchise locations for the periods
indicated.
Twelve
Weeks Ended Forty Weeks Ended October 4, 2009
October 5, 2008 October 4, 2009
October 5, 2008 Company-owned: Beginning of period 304 281
294 249 Opened during period - 10 13 27 Acquired during period - -
1 15 Closed during period - - (4 ) - End of period 304 291
304 291 Franchised: Beginning of period 131
123 129 135 Opened during period 1 3 4 7 Sold or closed during
period - - (1 ) (16 ) End of period 132 126 132 126 Total
number of Red Robin® restaurants 436 417 436 417
On December 31, 2008, the Company acquired a restaurant
that was managed by the Company under a management agreement with a
franchisee since May 2008.
RED ROBIN GOURMET BURGERS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In thousands, except share
amounts)
(Unaudited)
October 4,2009
December 28,2008
Assets: Current Assets: Cash and cash equivalents $ 8,860 $
11,158 Accounts receivable, net 7,944 5,611 Inventories 13,739
13,123 Prepaid expenses and other current assets 7,714 9,032 Income
tax receivable 1,120 6,208 Deferred tax asset 6,502 3,366
Restricted current assets—marketing funds 1,132
1,590 Total current assets $ 47,011 $ 50,088
Property and equipment, net 434,965 442,012 Goodwill 61,769
60,982 Intangible assets, net 49,478 51,990 Other assets, net
3,728 4,665 Total assets $ 596,951
$ 609,737
Liabilities and Stockholders’
Equity: Current Liabilities: Trade accounts payable $ 9,742 $
11,966 Construction related payables 2,485 9,747 Accrued payroll
and payroll related liabilities 26,082 25,489 Unearned revenue
8,649 11,997 Accrued liabilities 22,476 20,385 Accrued
liabilities—marketing funds 1,132 1,590 Current portion of term
loan notes payable 18,739 10,313 Current portion of long-term debt
and capital lease obligations 654 696
Total current liabilities $ 89,959 $ 92,183 Deferred
rent 30,017 26,790 Long-term portion of term loan notes payable
103,954 122,687 Other long-term debt and capital lease obligations
74,239 88,876 Other non-current liabilities 10,167
10,293 Total liabilities $ 308,336 $ 340,829
Stockholders’ Equity: Common stock; $0.001 par value:
30,000,000 shares authorized; 17,072,249 and 16,954,205 shares
issued; 15,579,969 and 15,461,925 shares outstanding 17 17
Preferred stock, $0.001 par value: 3,000,000 shares authorized; no
shares issued and outstanding - - Treasury stock, 1,492,280 shares,
at cost (50,125 ) (50,125 ) Paid-in capital 169,612 165,932
Accumulated other comprehensive loss, net of tax (1,563 ) (1,622 )
Retained earnings 170,674 154,706 Total
stockholders’ equity 288,615 268,908
Total liabilities and stockholders’ equity $ 596,951 $
609,737
RED ROBIN GOURMET BURGERS, INC.
AND SUBSIDIARIES
Condensed Consolidated
Statements of Income
(In thousands, except per share
amounts)
(Unaudited)
Twelve Weeks Ended Forty Weeks Ended
October 4,2009
October 5,2008
October 4,2009
October 5,2008
Revenues: Restaurant revenue $ 183,878 $ 205,286 $ 648,436 $
659,086 Franchise royalties and fees 3,035 3,299 10,265 11,367 Rent
revenue 34 53 147 166 Total
revenues 186,947 208,638 658,848
670,619 Costs and expenses: Restaurant operating
costs: Cost of sales 42,961 48,705 156,472 156,558 Labor (includes
$126, $298, $1,249 and $961 of stock-based compensation,
respectively) 64,113 68,300 224,063 222,395 Operating 31,950 36,236
106,976 113,139 Occupancy 14,434 13,977 47,836 43,195 Depreciation
and amortization 13,112 12,248 43,815 38,777 General and
administrative (includes $600, $1,886, $4,942, and $4,400 of
stock-based compensation, respectively) 12,109 15,659 51,080 52,588
Pre-opening costs 125 2,661 3,263 7,265 Asset impairment charge -
928 - 928 Reacquired franchise and other acquisition costs -
- - 451 Total costs and expenses
178,804 198,714 633,505 635,296
Income from operations 8,143 9,924 25,343 35,323 Other expense
(income): Interest expense, net 1,321 2,045 4,994 6,104 Other
10 7 29 (18 ) Total other expenses
1,331 2,052 5,023 6,086
Income before income taxes 6,812 7,872 20,320 29,237 Provision for
income taxes 1,110 1,698 4,352 7,894
Net income $ 5,702 $ 6,174 $ 15,968 $ 21,343 Earnings
per share: Basic $ 0.37 $ 0.40 $ 1.04 $ 1.32 Diluted $ 0.37
$ 0.40 $ 1.03 $ 1.31 Weighted average shares outstanding:
Basic 15,408 15,303 15,379 16,113
Diluted 15,535 15,415 15,488
16,251
RED ROBIN GOURMET BURGERS, INC.
AND SUBSIDIARIES
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Forty Weeks Ended
October 4,2009
October 5,2008
Cash Flows From Operating Activities: Net income $ 15,968 $ 21,343
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization 43,815 38,777
Stock-based compensation expense 6,191 5,361 Asset impairment
charge - 928 Restaurant closure costs 598 - Other, net (3,557 ) 231
Changes in operating assets and liabilities 3,495
219 Cash provided by operating activities
66,510 66,859 Cash Flows From Investing
Activities: Changes in marketing fund restricted cash - 81
Acquisition of franchise restaurants, net of cash acquired of $0
and $55, respectively (1,248 ) (30,389 ) Purchases of property and
equipment (40,776 ) (65,223 ) Cash used in investing
activities (42,024 ) (95,531 ) Cash Flows From
Financing Activities: Borrowings of long-term debt 147,900 155,900
Payments of long-term debt (171,815 ) (85,387 ) Purchase of
treasury stock - (50,042 ) Payment for tender offer for stock
options (3,498 ) - Proceeds from exercise of stock options and
employee stock purchase plan 937 1,456 Excess tax benefit related
to exercise of stock options 155 278 Payments of other debt and
capital lease obligations (463 ) (414 ) Cash provided
(used) by financing activities (26,784 ) 21,791
Net change in cash and cash equivalents (2,298 )
(6,881 ) Cash and cash equivalents, beginning of period
11,158 12,914 Cash and cash equivalents, end
of period $ 8,860 $ 6,033 Supplemental
Disclosure of Cash Flow Information: Income taxes paid $ 2,103 $
4,216 Interest paid, net of amounts capitalized 5,089 5,959
Supplemental Disclosure of Non-Cash Items: Capital lease
obligations incurred for equipment purchases - 156 Unrealized gain
on cash flow hedge, net of tax 53 356
Schedule I
Reconciliation of Non-GAAP
Restaurant-Level Operating Profit to Incomefrom Operations
and Net Income(In thousands, except percentages)
The Company defines restaurant-level operating profit to be
restaurant revenues minus restaurant-level operating costs,
excluding restaurant closures and impairment costs in the event
closure or impairment charges are incurred. It does not include
general and administrative costs, depreciation and amortization,
pre-opening costs and costs associated with the tender offer of
stock options attributed to non-restaurant employees. The Company
believes that restaurant-level operating profit is an important
measure of financial performance because it is widely regarded in
the restaurant industry as a useful metric by which to evaluate
restaurant-level operating efficiency and performance. The Company
excludes restaurant closure costs as they do not represent a
component of the efficiency of continuing operations. Restaurant
impairment costs are excluded, because, similar to depreciation and
amortization, they represent a non-cash charge for the Company’s
investment in its restaurants and not a component of the efficiency
of restaurant operations. Restaurant-level operating profit is not
a measurement determined in accordance with generally accepted
accounting principles (“GAAP”) and should not be considered in
isolation, or as an alternative, to income from operations or net
income as indicators of financial performance. Restaurant-level
operating profit as presented may not be comparable to other
similarly titled measures of other companies. The table below sets
forth certain unaudited information for the 12 and 40 weeks ended
October 4, 2009 and October 5, 2008, expressed as a percentage of
total revenues, except for the components of restaurant operating
costs, which are expressed as a percentage of restaurant
revenues.
Twelve Weeks
Ended Forty Weeks Ended October
4, 2009 October 5, 2008 October 4, 2009
October 5, 2008 Restaurant revenues $ 183,878 98.4 % $
205,286 98.4 % $ 648,436 98.4 % $ 659,086 98.3 % Restaurant
operating costs: Cost of sales 42,961 23.4 48,705 23.7 156,472 24.1
156,558 23.8 Labor 64,113 34.9 68,300 33.3 223,177 34.4 222,395
33.7 Operating 31,950 17.4 36,236 17.7 106,976 16.5 113,139 17.2
Occupancy 14,434 7.8 13,977 6.8 47,836 7.4 43,195 6.6
Tender offer stock-based
compensation expense
- - - - 886 0.2 -
- Restaurant-level operating profit 30,420 16.5
38,068 18.5 113,089 17.4
123,799 18.8 Add – other revenues 3,069 1.6 3,352 1.6
10,412 1.6 11,533 1.7 Deduct – other operating: Depreciation and
amortization 13,112 7.0 12,248 5.9 43,815 6.7 38,777 5.8 General
and administrative 12,109 6.5 15,659 7.5 47,366 7.2 52,588 7.8
Pre-opening costs 125 0.1 2,661 1.3 3,263 0.5 7,265 1.1
Tender offer stock-based
compensation expense
- - - - 3,116 0.5 - - Asset impairment charge - - 928 0.4 - - 928
0.1 Restaurant closure costs - - - - 598 0.1 - -
Reacquired franchise and other
acquisition costs
- - - - - - 451
0.1 Total other operating 25,346 13.6
31,496 15.1 98,158 15.0 100,009 14.9
Income from operations 8,143 4.4 9,924 4.8 25,343 3.8
35,323 5.3 Total other expenses, net 1,331 0.7 2,052 1.0
5,023 0.8 6,086 0.9 Provision for income taxes 1,110 0.6
1,698 0.8 4,352 0.7 7,894
1.2 Total other 2,441 1.3 3,750 1.8 9,375 1.5 13,980 2.1
Net income $ 5,702 3.1 % $ 6,174 3.0 % $ 15,968 2.3 % $
21,343 3.2 %
Certain percentage amounts in the table above do not sum due to
rounding as well as the fact that restaurant operating costs are
expressed as a percentage of restaurant revenues, as opposed to
total revenues.
Schedule II
Reconciliation of Non-GAAP Results
to GAAP Results(In thousands, except per share amounts and
percentages)
In addition to the results provided in accordance with Generally
Accepted Accounting Principles (“GAAP”) throughout this press
release, the Company has provided non-GAAP measurements which
present the 12 and 40 weeks ended October 4, 2009 year-over-year
change in net income and diluted net income per share, for the
tender offer for certain stock options and costs associated with
the closure of four restaurants during 2009, and the reacquired
franchise costs and other acquisition costs, and acquisition
related integration-related costs incurred during the 12 and 40
weeks ended October 5, 2008. The non-GAAP measurements are intended
to supplement the presentation of the Company’s financial results
in accordance with GAAP. The Company believes that the presentation
of these items provides additional information to facilitate the
comparison of past and present financial results.
Twelve Weeks Ended
Year Over YearPercentage
Change
October 4, 2009 October 5, 2008 Net
Diluted Net Diluted Net Diluted Income EPS Income EPS Income
EPS Reported $ 5,702 $ 0.37 $ 6,174 $ 0.40 -7.6 % -7.5 %
After-tax impact of : Asset impairment charges - - 728 0.05
Acquisition-related integration costs - - 7
- - - 735 0.05 Adjusted $ 5,702 $ 0.37 $ 6,909 $ 0.45
-17.5 % -17.8 %
Forty Weeks Ended
Year Over YearPercentage
Change
October 4, 2009 October 5, 2008 Net Diluted Net
Diluted Net Diluted Income EPS Income EPS Income EPS Reported $
15,968 $ 1.03 $ 21,343 $ 1.31 -25.2 % -21.4 % After-tax
impact of : Cash tender offer 3,145 0.20 - - Asset impairment
charges - - 677 0.04 Restaurant closure costs 470 0.03 - -
Reacquired franchise rights and other acquisition costs - - 329
0.02 Acquisition-related integration costs - -
192 0.01 3,615 0.23 1,198 0.07 Adjusted $ 19,583 $
1.26 $ 22,541 $ 1.38 -13.1 % -8.5 %
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